Financial News November 16, 2015
Daily Economic Outlook: 16th November 2015
The final euro area CPI prints for October and US Empire manufacturing survey will draw markets’ attention today. The headline CPI growth of the euro area relapsed into negative territory during September.
“We expect another -0.1% y/y print as downside signals from the latest BRC survey look set to be offset by forecourt prices. Meanwhile, the core rate, which excludes energy and food, is anticipated to edge down to 0.9% y/y from 1.0% in September. After spending linked to the Rugby World Cup propelled headline retail sales to 1.9% m/m (6.5% y/y) in September, we are looking for a flat October reading from Thursday’s release. This would still leave annual sales growing by a very healthy 4.9%”, says Lloyds Bank.
There is a speculation of the monetary policies of the FOMC and ECB are likely to move in opposite directions in December.
Market Review November 16, 2015
The Japanese economy deteriorated more severely than expected in the third quarter extending a downturn into a second consecutive three-month period and putting the country in technical recession. More specifically, Japanese gross domestic product (GDP) fell by an annualized 0.8% from a year earlier in the September quarter, the second straight decline. A darkening outlook for global growth has put Japanese businesses on the defensive. One concern is China, where growth in Asia’s largest economy is slowing, in some sectors markedly, meaning there is less demand for industrial equipment, construction machinery and other capital goods, much of which has been supplied by producers in Japan. Released also from Japan, Prelim GDP Price Index rose 2.0% versus the estimated 1.7%. USD/JPY is currently trading near the 122.65 area with the next support seen at the 122.22 level.
Elsewhere, global stock markets reacted after the deadliest attacks to hit France since the Second World War. The attacks left more than 100 people dead, dozens injured and left warnings that the terrorist attacks in Paris could spark a renewed session of volatility. The euro fell with French stock-index futures as investors responded to Europe’s worst terror attack in a decade by shifting out of riskier assets. Demand for havens boosted gold, government bonds and the dollar. Europe’s common currency weakened 0.3% and futures on France’s CAC 40 Index sank 1.5% as the violence in Paris on Friday sparked concern that geopolitical tensions will hurt trade and consumer confidence. Chinese shares in Hong Kong paced losses in Asian equity markets after authorities restricted the use of borrowed money to buy shares, while U.S. index futures dropped. Gold advanced the most in a month and Treasuries climbed for a fifth day, while Oil halted two weeks of losses.
The key events for the day would be the Eurozone’s Final CPI, Final Core CPI, ECB President Mario Draghi speech and the Canadian Manufacturing Sales.
Additional economic releases are the Canadian Foreign Securities Purchases, Empire State Manufacturing Index and RBA Assist Gov Kent speech.
Data releases to monitor:
EUR: Final CPI, Final Core CPI, ECB President Draghi Speech, German Buba Monthly Report.
CAD: Manufacturing Sales, Foreign Securities Purchases.
USD: Empire State Manufacturing Index.
AUD: RBA Assist Gov Kent speech.
Trade Idea of the Day
NZD/USD
Currently the pair is trading at 0.6532. Traders must monitor the 0.6624 resistance level and the support level 0.6497 for possible breakouts. A possible scenario would be a movement towards the 0.6560 resistance level, where a break may lead to the 0.6600 area. An alternative scenario could be a movement towards the 0.6515 support level, where a break may lead to the 0.6500 area where the support level would be tested.